1099-Q and taxable distribution

Forum|Forum|2 years ago
March 8, 2024
2 replies
25 views

I am taking the advice on 12/07/2019 from a Level 8 champ (taxiowa) and putting the 1099-Q's earnings as taxable and taking the full AOC education credit. It does come out to more. Are any of the earnings subject to an additional tax? It doesn't show up on the tax return. Just want to make sure I am doing it right.

ProSeries Professional

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Best answer by TaxGuyBill

So no penalty? If there is, I would have to override the zero and I won't be able to efile.

On the 1099-Q worksheet, scroll WAY down to the very bottom. You'll see the exceptions to the penalty and you'll want to pay particular attention to 2(e).

G

garman22

Intuit Community Champion

Do you mean a penalty?

D

Debst99Author

Level 5

Yes, like a 10% penalty tax.

T

TaxGuyBill

Level 15

Who is the 1099-Q issued to, the parent or the beneficiary/child/student?

Are there qualified expenses that the 529 plan can be applied to (including Room & Board)? If the 529 plan is applied to qualified expenses (after removing the amount for the AOC) then nothing is taxable. If there are not enough qualified expenses, then yes, part of the 529 distribution will be subject to tax and often a penalty.

F

Frustrated-in-IL

Level 8

I haven’t read the original post but these things are not as simple as you made it out to be. I have posted a lot in this. You need to fill out the Q worksheets and link it to the T worksheets. As TaxGuyBill said, there are qualifying expenses for Q that don’t work for T. If parents are claiming T credits and there aren’t enough remaining expenses for Q, the recipient of the Q, which could be the parents, grandparents,student, etc. will have taxable income and possibly a penalty.

D

Debst99Author

Level 5

If you read my post, I am making the 1099-Q taxable income because claiming the AOC education credit is more. When would a penalty be charged. My program put zero.

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